www.deltadental.com

July 21, 2015

Employee Benefits Security Administration

Attn: Conflict of Interest Rule

Room N-5655

U.S. Department of Labor

200 Constitution Avenue NW

Washington, DC 20210

Re: Proposed Rule on the Definition of the Term “Fiduciary” and Prohibited Transaction Exemptions

Submitted Electronically: www.regulations.gov

Dear Sir or Madam:

Delta Dental Plans Association (DDPA) is writing in response to the Proposed Rule and related Prohibited Transaction 

Exemptions (PTEs) published by the Employee Benefits Security Administration (EBSA) in the Federal Register on April 

20, 2015. The Proposed Rule and PTEs are intended to address perceived abuses with respect to investment advice 

given to employee benefit plans, plan fiduciaries, plan participants and beneficiaries, Individual Retirement Accounts 

(IRAs), and IRA account holders.

DDPA is the nation’s largest, most experienced dental benefits system. Since 1954, DDPA has worked to improve oral 

health in the U.S. by emphasizing preventive care, and making quality, cost-effective dental benefits affordable to a 

wide variety of large and small employers and groups, and individuals. DDPA provides a nationwide system of dental 

health service plans and offers custom programs and reporting systems that provide individuals, employees, and 

state Medicaid and CHIP participants with quality, cost-effective dental benefit programs and services. Our 

nationwide network of 39 companies and 151,000 dentists, serves more than 68 million Americans in over 122,000 

group plans across the nation.

DDPA member companies do not provide “investment advice” as service providers for employer-provided dental 

benefit plans. However, we are concerned that the Proposed Rule does not clearly exclude arrangements that are 

solely employee welfare benefit plans as defined in ERISA section 3(1) and request that any final rule expressly 

articulate an exclusion for group health and dental benefit plans. 

Intent of the Proposed Rule

The Proposed Rule appears to be intended to target investment advice affecting decisions about retirement savings. 

As stated in the Preamble to the Proposed Rule, EBSA believes new rules are needed to address the expansion of 

retirement savings options available to employees since the Department of Labor last issued regulations governing 

investment fiduciaries in 1975:

When the Department promulgated the 1975 rule, 401(k) plans did not exist, IRAs had only just been 

authorized, and the majority of retirement plan assets were managed by professionals, rather than 

directed by individual investors. Today, individual retirement investors have much greater 

Delta Dental Plans Association Julia Grant, VP of Government Relations

1325 G St. NW, Suite 500 (202) 552-7357

Washington, DC 20005 jgrant@deltadental.com
 www.deltadental.com

responsibility for directing their own investments, but they seldom have the training or specialized 

expertise necessary to prudently manage retirement assets on their own. As a result, they often 

depend on investment advice for guidance on how to manage their savings to achieve a secure 

retirement. In the current marketplace for retirement investment advice, however, advisers 

commonly have direct and substantial conflicts of interest, which encourage investment 

recommendations that generate higher fees for the advisers at the expense of their customers and 

often result in lower returns for customers even before fees.

80 Fed. Reg. 21930. 

Unfortunately, the definition of an “investment fiduciary” in the Proposed Rule is overly broad and could conceivably 

be construed to apply to a broad range of entities and individuals beyond those intended to be covered by be the 

Proposed Rule. For example, “investment advice” includes recommendations as to:

· The “advisability of acquiring, holding, disposing or exchanging securities or other property . . . .”

· The “management of securities or other property . . . .”

· Recommendations of a person who is also going to receive a fee or other compensation for providing any 

[investment] advice . . . .”

(29 CFR §2510.3-21 (a)(1)(i), (ii), and (iv)). The person providing the investment advice is someone that either 

acknowledges they are acting as an ERISA fiduciary or “renders the advice pursuant to a written or verbal agreement, 

arrangement or understanding that the advice is individualized to, or that such advice is specifically directed to, the 

advice recipient for consideration . . . .” (29 CFR §2510.3-21(2)). 

We are concerned that the Proposed Rule does not distinguish clearly between employee welfare plans and 

employee pension plans. A “plan” is defined as “any employee benefit plan described in section 3(3) of the Act and 

any plan described in section 4975(e)(1)(A) of the Code . . . .” (29 CFR §2510.3-21(f)(2)(i)). In relying upon ERISA 

section 3(3) the Proposed Rule would unintentionally include an “employee welfare benefit plan” in the definition of 

“plan”. We do not believe this result was intended by the EBSA in promulgating the Proposed Rule.

Differences Between Employee Welfare Plans and Employee Pension Plans

The primary goal of pension plans is to provide participants and beneficiaries with an accumulation of assets to fund 

their retirement needs. The fees or other compensation paid in connection with pension funding and the investment 

choices have a major impact on the retirement funds. For example, high 401(k) plan fees and fund investment 

options can directly reduce the benefits that will be available when an individual retires. As noted in the Preamble to 

the Proposed Rule, individual investors are taking on a larger responsibility with respect to their investment decisions 

in connection with IRAs and 401(k) plan options. 

In contrast, benefits in connection with a welfare plan are generally available to meet the needs of participants and 

beneficiaries with respect to a medical event. For example, dental coverage can be used to pay dental claims 

submitted by a health care provider. The insurance premiums or employee contributions to a self-funded welfare 

plan are paid on a per member, per month basis and the welfare plan is obligated to fund the benefits pursuant to 

the ERISA plan document and/or insurance policy. 

There are differences between the purposes and structures of employee welfare plans and employee pension 

plans. It is clear that the interactions between insurance companies, agents, brokers, and third-party administrators 

and welfare plans, plan fiduciaries, and plan participants and beneficiaries do not involve investment advice. As a 

result, the plan or product choices made by plan participants and beneficiaries should not be subject to the same 

requirements as the decisions made in choosing pension plan options.
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Proposed Amendment

To clarify application of this Proposed Rule as only affecting “investment advice” we suggest that any final regulation 

include either (1) in proposed subsection (f)(2)---definition of "plan"; or (2) in a new "Applicability" subsection; or 

both, the following language: "For purposes of this section the term "plan" and the requirements of this section do 

not include or apply to any plan that is only an "employee welfare benefit plan" as defined under section 3(1) of the 

Act."

Thank you for the opportunity to comment on this Proposed Rule. Please feel free to contact us if you have any 

questions.

Sincerely

Julia Grant

Vice President, Government Relations